Having given up on the price fixing for public projects bill (prevailing wage), the Democrats this week pushed House File 530, employee choice of doctor, or the employee doctor shopping bill.

HF 530 upsets the careful balance in workers’ compensation struck over the past 96 years. The bill reverses the current system that allows an employer to choose care for injured workers, and instead places the choice of doctor in the employee’s hands. This will destroy an employer’s opportunity to contract for health care and thus will raise insurance premiums greatly. This move will wipe out Iowa’s optimal position as a high benefit – low insurance premium state.

The bill, HF 530, provides that an employee may select their own doctor by having that doctor on file with the employer. The doctor need not be a specialist or occupational physician, and any referral to such a specialist must be paid for by the employer. Currently employers can send injured workers directly to the appropriate specialist thus avoiding the cost of the referring doctor. Under the bill, the added step of referrals and the inability of employers to contract for health care will drive up the cost of care and thus raise workers’ compensation insurance rates.

This bill attempts to “fix” a system that is not broken. Employees already have a procedure to request a change of doctor and in the overwhelming majority of cases such requests are granted. However most workers never feel the need to request alternative care. Less than two percent of those treated for work related injuries ever request alternative medical care.

Iowa workers already enjoy the highest maximum benefits of any state in the Midwest. Iowa’s rate of $1,206 per week outstrips the next highest performer, Minnesota, by $456 per week, and is far ahead of Nebraska, Illinois, South Dakota, Kansas, Missouri, and Wisconsin. In fact, Iowa is ranked third nationally, behind only the District of Columbia and New Hampshire.

Despite these high benefit rates Iowa still enjoys very low workers’ compensation insurance rates. Iowa ranked 41st highest in total premiums in the 2008 edition of Oregon Workers’ Compensation Premium Rate Rankings. The impact of HF 530 could be staggering to Iowa’s rates. In 2007, the National Council on Compensation Insurance (NCCI), the national manager on insurance data, estimated that the elimination of employer directed care in Iowa would increase premiums by up to $93 million per year.

The bill will impact the state’s general fund in two ways. First, since the state is self-insured, the increase due to the bill would be $5 million a year in workers’ compensation costs. Second, since workers’ compensation insurance premiums are tax deductible, due to the increase in premiums the state would lose $10 million a year in corporate income tax revenue.

Independent research into this subject has revealed that employees choose a provider based on familiarity rather than expertise. The result, according to the independent research group Workers Compensation Research Institute (WCRI), is an increase in medical payments, higher indemnity benefits, lower odds of returning to work, and increased time out of work.

At the public hearing held on the bill on Tuesday night, 24 of the 38 speakers argued against it. They included representatives of business and industry, doctors and nurses and even a few employees who had suffered injuries on the job. One speaker talked about getting hurt on the job and the system worked fine for him and it should not be changed.

After the public hearing, the bill was amended with a strike after amendment that made it even more onerous. The Labor Committee approved the bill on a party-line vote. The original plan was to read in the bill on Tuesday night and debate it on the floor on Friday. However, the House adjourned before the public hearing so the bill is not eligible until next week. At this point, the Democrats are at least 4 votes short of having the 51 needed for passage. Hopefully that will not change in the coming weeks.

House Republicans will continue to fight against these job-killing bills and instead push for legislation that will help put 80,000 Iowans back to work and create new jobs in the future.